This episode is a fascinating deep dive into the complex world of logistics. Our guest is Chris Jamroz, CEO of Roadrunner, a serial logistics entrepreneur who has indeed seen and done it all over his career. Chris provides colorful anecdotes about his past 100+ acquisitions and turnarounds, including the challenges and lessons learned along the way. He then gives listeners an up-close look at his current ventures – Roadrunner, an LTL shipping company known for its blazing-fast delivery speeds, and Global X, a rapidly growing charter airline.
The wide-ranging discussion touches on how the pandemic disrupted global supply chains and the “nearshoring” trend of moving manufacturing closer to home. Chris also shares insightful perspectives on economic conditions, the potential and limitations of automated trucking, and the value private equity brings to facilitating turnarounds.
For those interested in alternative investments, Chris even discusses how his family office allocates to areas like equipment leasing, real estate, and hedge funds. Overall, it’s a very entertaining and educational podcast that provides a true insider’s view of the logistics industry. SEND IT!
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Learn more about Chris: https://chrisjamroz.com/ & Roadrunner
Follow along with Chris on LinkedIn: Chris Jamroz & Roadrunner
Check out the complete Transcript from this week’s podcast below:
Optimizing the Supply Chain: Private Equity, Automation, and Economic Indicators in Logistics according to Chris Jamroz
Jeff Malec 00:06
Welcome to the Derivative by RCM Alternatives, where we dive into what makes alternative investments go analyze the strategies of unique hedge fund managers and chat with interesting guests from across the investment world. He wants to talk trucking. We all see semis criss crossing the country. But what is really happening behind the scenes with the logistics Titans to the larger economy and venture and private equity investment into this old boring industry. We sat down with Chris Jamroz, CEO of Roadrunner transportation systems. To hear all the details send it This episode is brought to you by RCM clearing the execution portfolio construction to outsource. From China to Nebraska RCM has you covered all things futures and derivatives, Learn more at our RCMalts.com. And now back to the show.
Alright, everybody, we’re here with Chris Jamroz. Chris, how are you?
Chris Jamroz 01:09
Oh, very well. Thank you very much. Thanks for having me on.
Jeff Malec 01:12
No worries. Where? Where in the world? Are You These Days?
Chris Jamroz 01:16
We are at the Roadrunner head office here in Chicago.
Jeff Malec 01:20
All right, let’s out with I take offense people actually call it Chicago. It’s in the burbs. Right. Chicago in the burbs Chicago?
Chris Jamroz 01:31
Exactly. And weary tivity of different areas of Chicago and suburbs. It’s it’s an easy, easy lane for us.
Jeff Malec 01:41
And but you split your time, you’re not full time in Chicago, sorry.
Chris Jamroz 01:46
No, I mean, it’s there’s a limited, I think limited effectiveness to my role. And just being in the head office, I do spend a fair amount of time on the road visiting our terminal locations, our partners, vendors, customers, that sort of takes me across the continent.
Jeff Malec 02:02
Lucky, the continent, not the states, the continent, we’ll get more into that. But to start out, just if you could give us kind of a high level, you’ve got so much on your CV there that would be take up the whole pad to go through the whole thing. So if you can kind of give us a high level of what you’ve been up to and how you found yourself here at Roadrunner in that cool t shirt.
Chris Jamroz 02:24
So I think I would describe myself as sort of a serial logistics intrapreneur. And, and, and a sort of a turnaround specialist, I usually partner up with financial sponsors and in logistics platforms exclusively across transportation and logistics. And at this point, I think in every possible mode of supply chain that I’m aware of, and through all different facets of supply chain, then I sort of specialize in effectuating successful exits for shareholder groups and management teams through creating value and operationalizing. What was perhaps envision investment thesis and, and at point, some point time didn’t go exactly as planned. And I just find it fascinating to extract so much value from under Managed operational enterprises within the supply chain
Jeff Malec 03:24
is that usually an IPO or it could be a private sale or it could be a merger, it could be all the above.
Chris Jamroz 03:30
It could be everything and I’ve done everything I’ve done. I’ve done several IPOs and secondary offerings to get to effectuate exits for management for management groups and obviously, shareholders constituency, but we’ve done exits through since outright sales for mergers through span spin out so through just everything you could possibly imagine as far as, but what the essence of that is that we’ve created companies that are attractive, that are valuable, that creates the PErforM of valuable relevant service and industry and generate economic profit and become attractive target for someone or the investors or strategics to take a very serious interest in.
Jeff Malec 04:14
And it’s over in your bio hair over 100 acquisitions. That seems like a lot. Yeah, a lot. There’s you’re not that old.
Chris Jamroz 04:23
Mouth. Thank you. Probably a little older than I look. But yeah, it’s been it’s been a lot more than 100 it’s just and that is just, it’s just incredible how you think, you know, I remember my first one and how stressed I was and now we’re trying to add all of those things up. And it just it’s just it goes into such large numbers. But it you know, you learn a lot through those transactions you learn. You learn by mistakes, always. I think that’s the only form of learning can do you learn a lot more from success. I’ve done a tremendous amount of mistakes and And Eric a lot. The thing what you learned through that is just you increase the velocity of your decision making so become smart in the process, you can take a lot of wisdom from lessons learned. But at the same time, you the increased velocity, the decision making helps you make the right decisions and correct the wrongs a lot faster. But it is it is a it is a collective, the volume of collective lessons learned is quite incredible.
Jeff Malec 05:26
And so all of this has culminated in the current two roles, it seems like you have many more than just just the two roles, but two of the more prominent ones are here at Roadrunner and global x, which one you want to jump into first.
Chris Jamroz 05:40
Oh, definitely rah rah rah rah knows my life. Yeah, we I’ve cleaned my play to be singularly focused on on this platform is the most spectacular comeback story that in the recent decades of transportation, you know, we’ve sort of we’ve, we’ve, we’ve fixed a company that was beyond broken, and we performed against all odds, there wasn’t a single person who would bet in our favor, that just simply, it would be nonsensical to do so. But we did it, we did it within a fantastic team with with the help of great customers. And this kind of this is what I think I love the most about what I get to do is taking an extracting value of and creating sustainable operating platforms and the times where everybody else will seem to have given up on them.
Jeff Malec 06:37
So tell us Roadrunner what you guys do.
Chris Jamroz 06:39
So Robert is less than full truckload LTL player in the market, which basically means that we consolidate customers freight inside our trailers. So we don’t have a single trailer dedicated to a single customer. In every of our trailers, there’s probably a lot of freight coming from a dozen or more shippers, and we specialize in in transporting freight directly point to point over long distances. So we, you know, if you need to get your freight from Port of LA or Long Beach or LAX airport to Chicago next business day, you call us on a Friday and gets that by Monday. That’s sort of our calling card we ultra fast we affected and expedite LTL play it but we are operating on standard LTL rates. So we you know, we provide a lot of value to shippers with with sensitivity towards speed, quality of service, as well as, as well as the fact that it’s people who are very sensitive to damage or loss of freight in the process of transport. We have a very attractive alternative.
Jeff Malec 07:53
And for rookie like me, why wouldn’t I just use FedEx or something? These are bigger than they can handle its unique Lowe’s, and
Chris Jamroz 08:02
you would our customers probably would not afford
Jeff Malec 08:05
that. Oh, it’s too expensive. Yeah, this we
Chris Jamroz 08:09
were talking. You know, FedEx is obviously a phenomenal courier. But that’s why I will just destroy the small parcel courier offering versus bulky and we’re talking about piece of machinery. Yeah, like 500 500 pounds and things like that. You cannot really lick it and put it in an envelope and seal it.
Jeff Malec 08:30
And you guys own the trucks, you own all the hardware. There’s
Chris Jamroz 08:33
a mix, there’s a mix. We have our own trucks that we have, we work a lot with owner operators, we have the preferred destinations for owner operators. So we also pride ourselves in putting people in business so small, small enterpreneurs to to own their own business. We have plans for that. But we we have a mix of power modes, but we are definitely the preferred destination for owner operators and team drivers.
Jeff Malec 09:01
And owner I was going to touch on that later. But I remember a couple years ago, Andrew Yang when he was running for president kept talking about truck truckers are the largest employer in I can’t remember how many states 15 states or 18 states or something. I don’t know if you have the math to back that up. But right like so it’s a huge industry of these owner operators. So you’re actually bringing them under your umbrella. They become Roadrunner employees or you just license they
Chris Jamroz 09:27
have an option. No, we actually do pride ourselves in promoting the owner operator models of independent of ours, we would become you know their destination and they’re the key partner. But you know, I think it’s something very American extremely patriotic about it. I’m obviously a naturalized Americans with my lifelong dream to live in the United States. And it is I truly feel this is the absolute the best country on Earth. But there’s something so incredibly novel that whether it’s a Native American that you Can you know in a first generation and generations, you can build a business that suddenly makes 6070 $80,000 You can change the the life for your family for your loved ones. And then when you start building your fleet of trucks and you actually become a true entrepreneur, and you know a small business grows, I think it’s it’s just incredible and, and I really have struggled through working through so many different facets and modes of logistics I, I really have never met a cohort of Americans or new Americans or aspirate Aspiring Americans, there’s more patriotic than the truckers. Yeah,
Jeff Malec 10:38
what are those trucks? Like? I want to get in one of those. Can you get me in one of those?
Chris Jamroz 10:42
Absolutely. All right. Nothing so magical. And just the allure of a truck that has the little house and home attached to the back of your cab. It’s it’s just fasting some people take go to rest and customize them. They look incredible, but it is it is quite an experience to be inside a sleeper sleeper cab.
Jeff Malec 11:02
Yeah, and what what’s a new one of those run me?
Chris Jamroz 11:07
Those goes, you know, the prices have spiked, you know, posts in COVID, post COVID. And now they’re kind of normalizing and you need to kind of looking at, you know, 150 to 200 G’s for for for REG. So, it’s not cheap. It’s definitely actually
Jeff Malec 11:23
it’s cheaper than I thought it’d be because I’m in the ag business. Right, those combines and the big tractors are actually in all those. Are those John dears are millions massive. Yeah. And then can you want to touch on global x now or leave it till later?
Chris Jamroz 11:39
Sure. Global X is you know, it was an offshoot investment and we led the transformative investment, the other airline precertification as part of the roadrunner spinner. So it’s not completely unrelated. It’s somewhat unrelated, obviously, different, different models of transport. And it is a you know, this is an incredibly fascinating story is the fastest growing charter airline United States. The objective is to be the largest operator of charter flights in the country. Well, I think we are well on track to do so. There’s a phenomenal management team. My engagement with that is obviously it’s a little bit more hands on chairman of the board. But the team is first class and it’s a fascinating story. Obviously, you see the the earnings report yesterday, we, you know, record revenues last year, the demand for passengers, charters is as strong as you can only imagine. So great things to come from that,
Jeff Malec 12:40
though it’s for its freight, air freight, or its passenger
Chris Jamroz 12:44
passenger with a little, little cargo operation as well. Okay,
Jeff Malec 12:49
so that’s like, what’s that one out on the West Coast that is doing, people keep telling me about a little private that they’re kind of not as nice as a full private. So it’s like that, or it’s just charter flights for
Chris Jamroz 13:01
these are charter flights for you know, whatever. sports teams, college teams, we do, obviously, you know, being based in Miami, we fly to Caribbean and all those beautiful destinations we serve in the you know, overflow airline for larger thing. We work with tour operators, like two weeks in Europe. So we just it’s just a very diverse, and markets.
Jeff Malec 13:25
And what are those planes? They’re modern planes.
Chris Jamroz 13:28
They modern, very modern Airbus 320 spec 20 ones.
Jeff Malec 13:39
So with all this logistics background, want to take a step back for a minute and talk kind of what you see being involved in at least logistics in terms of US economy, global economy. Right. We’re the Feds trying to get us on this perfect soft landing. So what are your thoughts with the front row seat you have? Are things slowing down? Are they speeding up? Where do you see the economy from your seat?
Chris Jamroz 14:03
So Jeff, from a freight perspective, we’ve been in a in a recession for probably a better part of many two weeks now. It’s just it is a freight recession post, you know, post COVID Spike. And so we’ve kind of we’ve gotten accustomed to a very tough and a weak freight environment globally. That goes across different modes. Obviously, ocean shipping is in probably the worst shape of all demos. Followed by you know, freight forwarder market is very challenging for truckload brokerage markets just charging expedite pure, pure brought expedite market is in a very challenging conditions etc. The LTL market is the one that is the most functional and the most resilience. Just because of number of macroeconomic factors geopolitical factors that change of buying habits the news are in New shorting trends all centered, which are all massive tailwind, driving right into the LTL space. But it is, you know, the freight environment continues to be very challenging and lackluster. It is people tend to forget that freight is a commodity markets and commodity markets and commodity industry cycle. And it just it’s just almost almost fascinating to me that even the smartest people sometimes tend to forget it, they forget at the peak of the cycle, when they think that this time will be different, unfortunately, that always ends up the same way and then sapping tears. And then it’s the people at the froth of the bottom of the market can’t seem to be seen past the doom and gloom. And at the same time that shall pass to as the Rumi the poet would say. So it’s just a cyclicality. So you’re always, you know, number a certain number of quarters away from a change in the cycle. And it always happens a little bit faster on a down cycle and a little bit slower on an app cycle. And, you know, right now we are at the trough. There is, you know, the what the Fed is doing is obviously, you know, very convoluted and complex and it just goes way beyond just a supply chain, because supply chain, in its complexity, and the growth still still accounts for about 80% of the GDP so significant, but not obviously all in all. And that’s you know, what happens with the economy, you know, that’s that’s probably a little bit too speculative for me to to apply. But the, the freight market will recover the next probably three to four quarters, as it always has to sit the quality of the industry.
Jeff Malec 16:43
We have an old saying here in the commodity trader world of the cure for high prices is high prices. Right? So that’s what leads to this mentality. So dig in on some of those what you just said earlier, like the nearshoring. And some of those concepts of that I’m not familiar with and the listeners might not be familiar with, or if you want to go back to COVID of what changed in freight during COVID. And now what the post COVID. situation looks like in terms of
Chris Jamroz 17:11
Yeah, that’s that’s a fascinating question. Thank you for the tip because I feel very passionate about it. So what has happened in the global supply chain, there was this obsession with China and obsession with offshoring and obsession with outsourcing and effectively what many manufacturers many industries found themselves in a position of complete dependence on a very remote manufacturing base in Southeast Asia and predominant China. And that was because of an ultra low labor cost and and sort of very inexpensive transport market and effective trans market that you know, the sailings from Hong Kong to La we’re taking fewer and fewer weeks and, and there were very inexpensive and the whole world accustomed to that business model COVID came and completely disrupted that those dynamics. So first of all, you find yourself out without your manufacturing base, you thought you had one. But you just realize there is a certain economic and geopolitical realities, when a country can shut up, shut you out of the market can completely cost your factories, and there’s nothing you can do. And you find yourself without your capabilities without your production without the thing. And then you’re looking at, you know, cost of shipping container, which pre COVID was about $3,000 to ship a 40 foot containers that called, you know, to use 20 foot equivalent units. So that for these, you’ve seen those on big container ships, you’ve seen them on the roads, a little like perforated metal, metal containers, these are the ocean containers, it used to cost $3,000 to get it from China to La Long Beach port, which is the main entry port for all free college China. Now in COVID, that spike to $27,000 per container. So just think about what it does to you to your operation. First of all, you can’t get the product manufactured because a country is shut down. And it’s not allowing your own workers to come into factories, and there’s nothing to do about it, then it turns out, it’s not such a friendly the jurisdiction as you may have thought previously. And secondly, it is prohibitively expensive to get that product out of the even if you can get your hands on it. So after that, what dramatic shift is I don’t think there’s a single CEO standing in front of any board in North America who would survive in the job without pitching and executing a credible strategy of reducing the dependence upon China for all its sourcing its manufacturing supply needs, any sort of arrangements. And what happened then is just as there’s been a love affair with Mexico, which can be like Well, hey, listen, we have this, you know, relatively cheaper labor pool now. as cheap in China, but I can track it from there. And they don’t seem to be fighting against this, they seem to want to be friends. That notwithstanding the obviously the the challenges that Mexico is dealing with the most domestic policies is actually a very country have great work ethic, relative proximity, relative cost arbitrage. So people just like rediscovered the neighbor to the south. And as you probably have seen last month, it was broadly broadly publicized that Mexico has now eclipsed China’s the US main trading partners, no more important training partner to the US and Mexico. Now, when you step back a little bit thing like, okay, who’s surprised about this raise of hands, like who’s surprising, the literally the guys that are right next door to you, right? They have the same bodies, they work hard, they love families, they believe in God, they just have so many incredible parallels between the two sides, and they just hardworking folks, and and it’s just, it’s just became such an you know, such a phenomenon, but I grappled why if it’s feels so intuitive, that you have this in that’s called nearshore, or friendly shoring, or, or onshoring, or whatever you call it, I’m still playing the cost arbitrage. But you effectively, what you may lose on a more expensive labor, you gain on a reduced cost of transport, ease of thing and speed to market. So think about all the industries from fashion garments, such that when they need quick runs, right? It’s like, you know, if something is hot, if that particular piece of outfit is hot,
Jeff Malec 21:41
you can get more of it right now. Yeah,
Chris Jamroz 21:43
yeah, versus you can get it next two weeks? No, it’s, it makes a difference. So and there’s also the language, you know, the ability to because we have obviously, so many jewels, speakers, etc. So, but what happens is because it’s so close, instead of building those huge walls that you need to fill the whole ship before you ship it. You can start shooting, you know, partial shipments and and you don’t need to wait for this, you know, opposite trailers to fail. So suddenly, there’s this demand, okay, how can we ship it effectively cost effectively, the good transit times, but I don’t need to fill the full trailer, I was just, I produce this I need to ship it. Or here you go LTL. Today, so you have this massive tailwind of of consolidating shipments shipping from cross border coming from the south of the border, even from guys like Laredo to anywhere in the country, or San Diego to anywhere in the country, and so forth. And on top of that, you’ve had the E commerce and obviously we’ve lived through, you know, 2020 2021 22 we’re seeing the world seems to have changed for good that you know, that you know, that Amazon was producing, delivering record results and record earnings and obviously that has subsided, but what has not changed, that the people have changed the shopping habits the E commerce is is driving again, in commerce when you buy, you don’t buy a full load the full truckload of toilet paper, you just buy a package. So when you consolidate the shipments, again, who comes to two into your mix LTL players. So this this whole thing is just a transitional shift into favoring an LTL market that now accounts for $60 billion a year versus a full truckload market when you actually have to fill out the whole trailer, which is probably you know, which is now it’s assessed 220 buildings probably a lot larger. But think about the LTL is now almost half of what’s reported to be as a truckload market, which is just phenomenal. So it’s a good place to be,
Jeff Malec 23:49
and how so how does that work? For you guys? You were already in Mexico. You already had
Chris Jamroz 23:55
the she’s not even in Mexico yet. So we, I we go we go through prior experiences. I’ve done a lot of business in Mexico. It’s a very interesting market. So we are exploring how are we going to do this, but it’s more of a the tide that raises all the boats Geralyn Yes, you know, serpent we still are a small relatively small play in LTL market. But I want to just to give you the context of why this is such an attractive thing and how much runway is ahead of the company like ours, as we are just preparing to organizationally handoff the cross border, Mexico to the US and vice versa shipments we are in Canada and obviously that’s a big trading partner to the US as well, for similar reasons. And that’s that’s obviously a wonderful capability that we have for ourselves.
Jeff Malec 24:44
And the so it seems like like five years ago it was we’re making everything in China. We’re all buying it on Amazon Amazon’s delivering it all to us, right so it’s kind of one I’m oversimplifying a great deal, right but kind of one big company one big part You’re in China, one shipping route. And now you’re saying, hey, now we have all these smaller players are kind of competing with Amazon plus we have all these different areas where the goods are coming from. So it’s become much more diverse by
Chris Jamroz 25:14
it is diversified, it’s easier to do trade because they are part of the same trade zone. So you have people like Dominican Republic, Honduras, there’s a lot of those, you know, near nearly near base geographies with good opportunity areas to set up manufacturing and production facilities. And I think I think the world is becoming a far more interesting place for reference off of them appearing as good partners to us.
Jeff Malec 25:42
I think, for those in the trading world, I think that’s the peso has benefited from that. I think the pace was at like five, six year highs based on that, that string. Yeah, right. And it right. Like you said, it makes total sense. Like why haven’t we been doing this the whole time? So we talked a little bit about it with rates. What do you see in terms of rates that hurts people trying to buy a new truck that hurts, right? Does it hurt the overall logistics industry or the your specific LTL and Roadrunner have rates remained stubbornly high?
Chris Jamroz 26:23
Sort of the, you know, I always think about this, we the service provided to the community of shippers and buyers so that we could consume it with definitely have an impact on any transport business. Right now, I think what has happened over the last two years, the the, a lot of people, overbilled, the inventories, because they were expecting the 2021 2022 trends to continue somewhat probably at the reduced pace, but they probably were caught absolutely unprepared with an absolute Cliff off for demand. And with huge inventories that they need to, they needed to get rid of. And people have become very, very careful how they’ve stocked the inventories and restock the goods. And this is sort of weird, such a low inventory level now that, but people are still careful. So the interest rates definitely hurt. Anybody who needs to invest, because capital is so incredibly expensive, right? I mean, if you if you try to re mortgage or refinance your house or the last, you know, five months, you probably get a shock of a of a generation hoping for that could be so that obviously, the trigger effect, because people are not investing as much, the consumer is still very strong in the US and defying the sort of define the logic define the gravity, and the spending continues, which obviously counts for nearly three quarters of all GDP in the US. So that’s very good to see. But things are more expensive, right? And capital is scarce. And I think, you know, there’s a big anticipation of the Fed, starting to begin to lower the rates, so that the investment phase of the economic expansion really launches. And that I think, is the premise of the soft landing, and then managing the inflation inflation is instead of people are surprised that because you’ve gone or you grew up in a country where inflation could wipe out your everything within a sort of a day or month. So inflation is a very dangerous economic indicators, very important one. So I applaud the Fed for keeping an eye on that, managing this because it’s it is like cancer, and very rapidly spreading cancer. But I think the way that it’s it’s being financed, not without risk, but I think all the indicators are shifting in favor of one described as software.
Jeff Malec 28:49
And but for you guys in particular, you would if you’re, if you have to demand you’re gonna pay whatever rate you need to get new equipment to get new. Right. So it’s more demand based and
Chris Jamroz 29:02
rate based. I think we agnostic, I want to just tell you that I think we are we we’ve sort of we we cycle agnostic, that’s the beauty of Roadrunner, the way we’ve built that we’ve decided, I can tell you that our financial results have never been as strong as they are now. Even though we operate the bottom of the cycle, so I cannot not nor I will accept an excuse or the economy because we are so small that we should outperform any cycle, any economic environment, etc. But to us, we are cycle agnostic, and it is we provide a you know, a sort of a man service that is so important that it’s just the demand, whether it’s going higher, I’m sure there’ll be times when it’ll be easier to win business and grow faster. But at the same time, I think we with the way we’ve designed our levers here, our position is quite favorably no matter what the economic cycle we find ourselves in.
Jeff Malec 29:55
And I just got the name Sorry, I’m slow, like Road Runner. It’s fast. So you’re getting these reps, you’re getting them the service you’re getting them what they need quickly. The road run and he’s on the road the Road Runner.
Chris Jamroz 30:06
That’s right.
Jeff Malec 30:07
Do you guys got any pet Road Runners there? I saw a few and we’re out golfing in Arizona. They’re just walking around the golf course it’s cool
Chris Jamroz 30:15
that they possibly have buggers. They run fast. And so doing
Jeff Malec 30:20
so doing and then I want to go into a little bit it’s always been a little fascination of mine. Like how far out are we in your opinion from automated trucking automated shipping like the far reaches of okay, we don’t even need any of these owner operator truckers who we just praised 10 minutes ago Sorry, guys. Right but are is that on the horizon somewhere?
Chris Jamroz 30:46
I think it’s on the horizon somewhere. I think it’s you know, I was kind of take make a joke that you know, the minute we can take a pallet from LA to Chicago and can transport in Metaverse count me out. I’m not showing up for work. If anybody can convince me that that pallet was that part of engine or that consolidated freight can skip the forklift skip the top skip the skip a human? I don’t know. It would be it would be, you know, it would be interesting to see automated, I mean, autonomous tracking, I think that’s something that can help I don’t think would ever replace but I think would substitute and help elevate the gaps. And you know, like this admits truckers worked very hard. It’s one of the probably hardest jobs you can imagine. I mean, it’s, it’s so toiling on you physically, mentally, it takes you away from home and your loved ones for extended periods of time. I mean, it I have so much respect for our driver partners. It’s you know, it’s it’s, it’s it’s it at times it loses its appeal as generation shift and retire. A few years ago, that was you know, people talked and cocky, that was about 300,000 shortage of drivers in the United States. And then COVID happened and then there was, you know, that truly became one of the best paying jobs. And then obviously, you know, a lot of people are leaving the trucking industry. So there’s ebbs and flows and things, but I think they’ll always be there always will be the need for for trucker. But I think the the entry of autonomous vehicles over the period of next decade, I think should elevate some of the volatility and cyclicality of truck truckers within leaving and entering the market.
Jeff Malec 32:40
The what I’ve read is that last mile is the hardest part for them to figure out right? Like maybe you could be on the highway autonomous from LA to Chicago. But when you’re getting off in Downers Grove and making that tight turn on such and such Avenue and having to back into that stall to deliver it. That’s the hard part. That’s where you need the human through.
Chris Jamroz 33:01
And you know, when you talk to people use those first mile final mile final mile means you have to take a washing machine out of the thing. Take it on a on a dolly, drag up to somebody’s condo and put it in the laundry room. So
Jeff Malec 33:16
whether where it is in the truck do right. Yeah. So it is not the only thing in the truck a little ways away from that. Got it? And but it’s always fascinated me like what do you think the amount of investment into automation and robotics and AI is probably 100x What it is to kind of I’ll call your boring your business boring businesses here for a second don’t take offense but right like as compared to those guys. I like businesses. Yeah, exactly. It’s always interesting to me, like the smart money is probably like, Hey, I’m gonna invest in this thing over here, which nobody cares about, but which can throw off this great return.
Chris Jamroz 33:52
Listen, there’s so much capital invested in AI and automation and autonomous technology that it’s bound to, to come through at some point and I think it will make the world a better place. It will make it more interesting. I just, you know, that’s not something that it’s in my business plan for the next year, that’s for sure.
Jeff Malec 34:17
So speaking of investment, we’ll pivot towards so Roadrunner was PE owned, or still is PE owned or how does that so Robin
Chris Jamroz 34:24
is a publicly publicly traded company that has a very large majority shareholder, which is an institutional shareholder. But there’s there’s there’s a lot of shareholders institutional and private and voting.
Jeff Malec 34:39
Okay. But you’ve been involved with a lot of these 100 Plus acquisitions from private equity coming into the space. You’ve told me offline, some of these guys, they’re calling you like, hey, we bought this. It’s not working out. Can you come fix it? So I want to dig in a little bit with you of just how you view private equity How the companies themselves? Do private equity. Have someone like you coming in? Is there pushback? So I don’t know if there’s a question in there, but I’ll let you I’ll ask the question is, from the company side, the people view private equity as the devil or as an angel of like, Oh, we’re getting saved.
Chris Jamroz 35:17
I think I think there’s sort of the bad rap from private equity came from 1980s. Was you had that sort of, you know, depicted in many movies and future productions of this ruthless barbarians at Hong Kong are there again, prepares for good you have the false you know, whether in the UK or here in the US where people are just buying us at and kind of forming financial arbitrage or divesting shutting down, etc. But at the end of the day, private equity appeared as a very effective form of capital effectuating. A lot of changes that well, at the time were very disruptive that led to significant and outside value creation, I think it’s an extraordinarily attractive constituents of capital, it continues to look very attractive returns, oftentimes outpacing the public market returns. And it’s commonly associated with sort of a smart money investing when people take the nonsense out of the equation and focus on what drives the most value. I think most private equity firms are very focused now on providing opportunities for the employee cohorts to build a wealth alongside those shareholders and, and that sort of employee ownership model, sponsored, you know, KKR is, you know, the the leader in this, you know, I am personally a huge believer that so, I kind of I love owners in the business, and I love being in the business with people who call on the business, I think that changes that makes it more prideful, and then kind of gives people a reason to give the best. And that’s not always possible through other forms of ownership. When there’s change, we humans, just obviously, people resist change. I don’t I’ve never had balloons in the cake when I first walked in yet waiting for that one, one moment, when there is a, there was a show in the magician, I get a little pony and
Jeff Malec 37:14
they were daggers and shields probably right? It’s just,
Chris Jamroz 37:18
you know, but it’s at the end of the day, it’s you know, what you come in you have you know, it’s never the people’s faults always the leadership failures. So when their leadership fails, and that’s operational leadership’s and private equity firms, you know, they don’t they, they do buy businesses by the really invest in management teams. And if those management teams fail, that obviously had a lot of negative externality. So when you come in, you have probably, you know, a fairly a wounded and hurt employee cohort is just you know, people may not feel as proud of being of affiliation and, and have been, you know, they’ve seen the distress, personal stress levels are elevated, etc. So it’s not really that difficult to understand why I do, I do enjoy my farewell party. So when there is a an exit event when there’s a liquidity event and isolation event, and people can I love the letters, I love the stories, I love the messages, and those parties are a lot of fun. When I kind of go on to the next one, I see something that we’ve changed people’s lives, and we’ve loved them so much better than when we found it. And that would be difficult to do it without the private equity, financial sponsors hedge funds and, and other members of that financial constituents. And I think that’s, that’s, that’s interesting. And that’s what I do. And that’s what I love doing. And a road runner now is my absolute passion, it became a little more personal than any other business before just because we how hard we’ve all work to, to turn around such an incredible operation. And
Jeff Malec 38:53
touch on what you said a second ago, like the hedge funds and the private equity coming in, is it and I think I’m going to know your answer. But is it their money or their skill and being able to get the right management and leadership in or a combination of both? Right? If they just had the leadership and not the money? Would it still work?
Chris Jamroz 39:11
The the institution investors, institution investors obviously represent not their own money, they it’s their route, the limited partners, funds so they serve and conglomerate aggregator of funding, but I think what they do bring is the discipline and freedom to act. So instead of removing the barriers that, you know, sometimes it’d be difficult to orchestrate such difficult turnarounds in the public market where you have to stand in front of investors in 90 days and explain what you’re doing and that could be difficult, if not impossible, at times, the private equity that brings the discipline the expectations of of driving value, making quick moves, acting in a conservative disciplined way in a decisive way. And also the gives you the freedom for executives, like myself secures the freedom to act and, and do it, do it with an expectation of creating value. So that’s what I think is the main benefit of working with, with with these players.
Jeff Malec 40:13
But the money is needed. So if they were like, it just removes that, oh, this we could really grow if we could do this, but we don’t have the we don’t have the capital to do it. Right removes that kind of barrier for ideation.
Chris Jamroz 40:26
I think, Jeff, I think every company deserves the need to deserve the right to grow. And once you deserve your right to grow, the capital ceases combined. The capital is an easy excuse that people, people that are inept, or without results, etc. It’s, you know, the greatest stories that I’ve seen the greatest turnarounds that I’ve been privileged to be part of, they all came from scarcity of capital, and a lot of doubt and innovation because you make brings the best out of people. And then it’s just capital as a byproduct of success. There are obviously different situations when somebody gives you a pot of gold and ask you to build something incredible. That’s not the universe that I labor I live in and sort of very boring businesses where basic industries, but the capitals is never difficult to come by when you actually when you gain your credibility and confidence from your investor constituencies.
Jeff Malec 41:25
Is it hard for you to then have to leave eventually, right? If you build these connections, you build this?
Chris Jamroz 41:31
Yeah, when we saw the Senate in December? Well, first of all the sauces did not make it easy. I’ve never received as beautiful letters I received from assent personal stories, pictures, and
Jeff Malec 41:42
sorry, it was a scent was part of Road Runner and you spun it off? Yes,
Chris Jamroz 41:47
it was part of the part of it was a group of companies within a roadrunner that we grouped together, we spun up in a private entity, we ran it for three years, and we ultimately sold it. And, and that was just it was very difficult to leave. And I take the business, I lived in my office for seven months. So I actually had a pullout sofa in my office, I had a bathroom there, etc. So I live in America. So it was a very personal thing. So it’s just a, you know, but you know, change is good. And, and you know, when you see the new executive stepping in, and you see the existing leaders stepping up and having an opportunity to orchestrate and drive they’re on being the chief architects of the new future. It’s I think that’s what teacher probably must feel like when the kids graduate. But there’s an opposite profound sadness and heartbreak that you no longer part of this story.
Jeff Malec 42:44
That’s got to be the toughest part. And one more since we are a hedge fund podcast, I got to ask a few more of these hedge fund questions. But what there’s a feeling that there’s too much money in private equity, right? And it’s it’s driving up prices, like private company premium traded a premium to public markets. Now they used to be at a discount because of their illiquidity. So are you seeing any of that maybe not in the companies you’re involved with? But tangentially of? Like, yes, I can’t believe that company just sold for X to private equity like that valuations have gotten out of hand. Or maybe because you’re in this recession in your space, it’s been less.
Chris Jamroz 43:22
I strongly believe that the markets are very effective, and particularly, you know, the global markets affected and people are drawn to assets that have priced or fully priced. And I don’t, you know, I don’t personally think that that’s that’s overpriced. I think it’s just a maybe different form of valuing companies when you think about, you know, hedge funds, the traditional hedge funds, traditionally were, you know, public public equities, please. Right, it is looking at arbitrage and in underpriced or overpriced markets and, and took either activist approach or just purely technical approach, you know, smartest, smartest people smartest money in the world, the private investors do things differently, you know, the public markets tend to target a forward looking guidance you buy into the reading into the future story, how you’re selling a public company that just you may not have anything to show for yourselves right now. But if you can sell it, where are you going? Incredibly, and you have some credibility with investors. You know, that’s, that’s that’s one part of the profit private equity investors value in a sort of what they call LTM, the last 12 month performance and every every indication is just people look at your past performance and they do to me they always remain a little bit skeptical of what the future guidance may otherwise be. So develop They’ve developed their own courage of conviction and their own sort of resolve around the assets future but they guided more of historic performance versus the private investors or a futures I think at the times where you have Have a lot of uncertainty in the market. And the public market is where, you know, everybody participates, the retail investors, individual investors as well as institutional investors, you have a lot of volatility and may have a little bit subdued performance at the times of you know, lackluster confidence where there’s the private equity investors are looking at the actual track record of performance, and they tend to value assets based on that. So I think that could be that in my opinion, I don’t see that much. You know, that always happens. There’s always that one transaction everybody talks about, like, how on earth did they get that how on earth somebody valued them? That kind of teams to kind of normalize and regulate in time so it’s just you know, it’s a temporarily emotional upheaval I
Jeff Malec 45:49
wanted to touch real quick on is it line nine or line i X Lion X Silex? It’s because that sounds like a hedge fund. Right? So it’s a
Chris Jamroz 46:01
lie of x is a fruit of love of mine, there’s basically a group of us who move from platform to platform for a company company, because obviously, it’s not just me, I wouldn’t have, I wouldn’t have done it with a team. And it’s an it’s a, it’s a certain degree of changing group of individuals, because some of them do fall in love with the companies were for and do find themselves, they, they want to become permanent part of the fabric of these entities that we’ve turned around and built and, and they leave the group and there’s, there’s obviously always new people who join and become incredible partners to me, and we move to another investment, etc. So it’s a it’s a, it’s, I named our group, why next and, and it’s effectively, you know, a group of very operation minded executives to help effectuate exits for private equity firms and financial sponsors, hedge funds, and so forth. And we create value through operational discipline. We have a playbook in which the sort of, we’ve done seven exits, we batting 1000. And we’re doing well. And you know, I can’t wait to see what the future holds. Yeah.
Jeff Malec 47:17
So I read in somewhere that it was doing, like, some leasing like I was thinking, it’s like an aircraft leasing or a private credit fund, but not exactly it’s we
Chris Jamroz 47:29
do, we do do that too. There’s a light X is also my private, my family offers the name of the office. So I do have an investment in equipment, leasing businesses, and real estate and the number of others cybersecurity, etc. But the core, the core fall, and it’s no different than any others, you know, family offers. But the core of it is the group of remarkable individuals who are changing the shape of logistics and globally at this point.
Jeff Malec 47:58
And so since you’re on an alternative investment podcast, we’ll have to ask you, what is the family office looking at any alternatives, managed futures, hedge funds? Do you do anything outside of logistics and those other companies?
Chris Jamroz 48:11
I do have people who manage those things i i completely stand so completely focused on operating the businesses. But yeah, we do obviously have many of our partners, the hedge funds that who own majority of the businesses restructure they often are the people who like CO invest, invest my money. And so I know that’s that’s sort of funny, how small the world becomes. But yeah, absolutely. The exposure. I think any any family office would be for them to have exposures to alternatives and hedge funds and other forms of investment.
Jeff Malec 48:51
I love it. All right, what else we have talked about, Did we miss anything?
Chris Jamroz 48:55
I cannot thank you enough. It’s I’ve enjoyed this Doralee. It’s a lot of fun talking about things that I feel very passionate about. So thank you very much for giving me a platform to speak.
Jeff Malec 49:05
No worries. Thank you. And we heard it here. The trough is in freight is going to start climbing back up.
Chris Jamroz 49:13
And he any data any day, now.
Jeff Malec 49:15
I went Did you know there was a group that was thinking about doing freight futures? I think it was like truckload futures, where companies could hedge against the freight prices rising or falling. I don’t think it ever got off the ground. But that would be interesting, right?
Chris Jamroz 49:33
That would be something that’d be something I am probably not as adventurous. Towards was the boring end of that logistics spectrum where I kind of continue to labor but that’d be something to see. That
Jeff Malec 49:47
would be interesting. All right. We’ll leave it there. Chris. Thanks so much for having you. Yeah, we’ll talk soon. Thank you. Okay, that’s it for the pod. Thanks, Chris. Thanks to RCM for their support thanks to Jeff Burger for producing. We may be off next week. Have a little guest issue there but we’ll be back after that with a guest from trend follower, Lauren Cord. So go ahead and subscribe to get it right when it drops piece.
This transcript was compiled automatically via Otter.AI and as such may include typos and errors the artificial intelligence did not pick up correctly.
